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During the 1980s the potential instability of Zimbabwe`s unsustainably high budget deficit was reduced by the smooth … for analysing cointegration to model the demand for real money balances in Zimbabwe, in order to determine the extent to … which these constraints on the domestic asset market suppressed the demand for money in Zimbabwe …
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The paper investigates whether free capital mobility leads a government to tighten its budget deficit for fear of being penalized from the international capital market. The author tests the hypothesis using three-stage least squares (3SLS), which can control for the endogenous nature of capital...
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